Health insurance-small employer carrier reinsurance.

06LSO-0414.L1

                                                         

FISCAL NOTE

The full fiscal impact is indeterminable, though the bill makes continuous appropriations from the Small Employer Carrier Reinsurance Account.

 

Explanation:

Currently, the monies received from premiums and assessments in this program are handled by an administrator hired by the board which oversees the program.  This bill creates a state account into which the money received is to be placed.  Therefore, in that sense, the state is now collecting the money and its revenues increase.  The formula for assessing insurance companies has also been changed.  Now all insurers are assessed where previously it was just the insurers providing small employer health insurance.  The formula is further changed in that assessments will now be in proportion to a particular insurer’s gross premium tax as opposed to an insurer’s share of premiums under the current law.  Because of the variables which must be used in calculating assessments and premiums, the amounts paid into the account are unknown. 

 

In 2005, the program received $411,228 in premiums and paid claims of $178,217.  In 2004, the program received $380,800 in premiums and paid claims of $1,179,000.  In 2003, the program received $379,100 in premiums and paid claims of $1,344,100.  Through 10/31/05, the program received $337,300 in premiums and paid $73,114 in claims so far for 2005.  The claim payments tend to be volatile from year to year, i.e. they fluctuate a great deal.

 

The funds in the Small Employer Carrier Reinsurance Program Account would be invested as part of the State Agency Pool and, using January 2006 CREG investment income projections, would earn investment income of 4.34% for FY07; 4.53% for FY08; and 4.72% for FY09.

 

Source of revenue decrease:

Under this bill, insurers that are assessed to support the reinsurance fund will receive a credit on premium taxes owed the State of Wyoming.

 

Assumptions:

Because of the variables in determining assessments it is difficult to predict the amount of the credits which will result in less money going into the general fund.  The most recent assessment was $1,600,000 in April, 2004.  No premium tax credits are given under the current law.

 

Prepared by:   Don Richards, LSO           Phone:  777-7881

(Information provided by Ken Vines, Insurance Commissioner, phone:  777-6894; and Sharon Garland, State Treasurer's Office, phone:  777-7475.)